If you’re married, Social Security spousal benefits can impact your retirement.  Today we’ll take a deeper dive into how they work.  And if you are no longer married, we have a bonus tip for you at the end.

Video: How Social Security Spousal Benefits Impact Your Retirement.

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Whether you’re married now, or were married, you should be aware of the provisions for Social Security spousal benefits. This allows you to receive an income based on your spouse’s earnings if their income was more than yours.

Here is how it works.

Computing Social Security Spousal Benefits

When you’re married, and you’re the lower earning spouse, your Social Security benefit will be

  1. Your own benefit based on your own earnings, or
  2. A spousal benefit equal to one half of your spouse’s earnings.

Here’s some numbers. (Click the images to enlarge)

Here are some key things you need to know.

Your Age Matters

Social Security reduces your benefits if you retire early. The spousal benefit portion of your income faces a bigger discount. So if you were born after 1960, your normal retirement age is 67. Your benefits get discounted 30%. The spousal benefit gets discounted 32.5%.  (Click image to enlarge)

The Higher Earning Spouse Must Also Receive Benefits

You can apply for your own benefits any time after age 62. However, you won’t receive spousal benefits until your spouse starts their Social Security.

So if your spouse continues to work, you can receive your $800 per month adjusted for your age. Then when your spouse retires, you can get the spousal benefit, adjusted for your age.

If Higher Earning Spouse Retires Early, It Reduces the Spousal Benefit.

Social Security computes your spousal benefit based on the higher earning spouses actual benefit.

So if the higher earning spouse retires early, the maximum spousal benefit will also be reduced.

Spousal Benefits Do Not Benefit From Delayed Retirement Credits

If you delay retirement beyond your normal retirement age, your primary benefit increases. The delayed retirement credits add 8% each year you delay your benefits until age 70. But these delayed retirement credits don’t apply to spousal benefits.

Your spousal benefit is capped at half of your spouses benefit at their normal retirement age.

The higher earning spouse will see their benefits increase for delaying retirement. But, the spouse will not. 

Bonus Tip:  Divorced spouses can file on their former spouse’s earnings record.

If you meet certain conditions, you can claim a spousal benefit on your former spouse’s social security record. Here’s how. (Click Image to Enlarge)

Your ex doesn’t have to be receiving their Social Security in order for you to file for spousal benefits.

And your age will factor into any discounts you may face.

Social Security has a lot of wrinkles and moving parts. And often times it can be tough to work through it.  Spousal benefits can have a significant impact on your retirement income.  Knowing some of the key decision points can help you plan for a better retirement.

Financial Planning

Neal Watson is a Certified Financial Planner™ Professional and a Financial Advisor with Fleming Watson Financial Advisors  He typically works with people who are planning for retirement.  Fleming Watson is a Registered Investment Advisory firm located in Marietta Ohio.  Our firm primarily serves Marietta, Parkersburg, Williamstown, St. Marys, Belpre, Vienna and the surrounding communities in Washington and Noble Counties in Ohio and Wood and Pleasants county in West Virginia.

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